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2 Indian gas surplus on
horizon By Siddharth Srivastava
NEW DELHI - A report by India's Ministry
of Petroleum has said that the country will
possess surplus natural gas in the next two years
and its rapidly growing economy is likely to be
fueled by it after major discoveries by state-run
and private energy companies. Currently, India
meets 70% of its energy requirements through
imports.
"The major natural-gas recoveries
off the east coast and aggressive acquisition of
oil and gas blocks overseas might make
India
a gas-surplus country in another two years, and
the natural fuel is all set to replace the
country's agrarian-based economy," said the
report. "The planned cross-country gas pipeline
and city gas-distribution networks will go a long
way towards influencing India's economy."
The report said that in another five
years, almost all commercial vehicles in the
country would switch over to compressed natural
gas (CNG), which is a cheaper alternative to
gasoline. India imports 70% of its crude-oil
requirements and is able to meet only half of its
gas demand of 170 million standard cubic meters
per day (mmscmd).
India's largest private
company, Reliance Industries Ltd (RIL), is
expected to be a significant contributor to
India's becoming a gas-surplus nation.
RIL
should start production from the gas-rich
Krishna-Godavari (KG) basin by mid-2008. Estimates
of production from the block (dubbed KG-D6) were
doubled to 80mmscmd recently, which is almost
equal to the 84mmscmd of gas produced in the
country today.
Other operators in the KG
basin area, such as the Gujarat State Petroleum
Corp (GSPC), are also expected to start production
by January 2009.
One of the biggest and
most significant discoveries in the hydrocarbon
sector in India took place in June 2005 when the
GSPC consortium struck gas at its KG-8 well in the
KG Block off the coast of Andhra Pradesh. The well
has an estimated reserve of 20 trillion cubic feet
(tcf), which makes it the largest Indian gas
reserve, the value of which is estimated to be Rs2
trillion (US$44.6 billion). Daily production is
estimated to be in the range of 65 million to 70
million standard cubic meters.
The GSPC
find eclipsed the 14tcf discovery, also in the KG
Basin, in 2002 by RIL, though there is some
controversy about the estimates, with RIL
considerably revising the find.
There is
no doubt, though, that there will be a sharp
increase in domestic gas production, which will go
up to 188mmscmd in 2009-10, according to the
Directorate General of Hydrocarbons.
The
infrastructure is being put in place. According to
the report, the government-run Gas Authority of
India Ltd (GAIL) has plans to set up a national
gas grid, while RIL is laying pipelines to bring
gas from the coast of the southern state of Andhra
Pradesh (KG basin) to Mangalore in the south,
Jamnagar in the west and Dadri in the north. This
pipeline will connect cities along the route and
help alleviate the country's gas shortage.
RIL is mulling a proposal to form a 50:50
joint venture with Indian Oil Corp and GAIL for
city gas-distribution projects.
Since the
government opened the energy sector to private
participation, many global and domestic players
have applied for gas-distribution rights. Reliance
has emerged as the biggest domestic player and has
applied for distribution licenses in 100 cities.
Reliance chairman Mukesh Ambani has said the
company's gas supplies to consumers will cost 30%
less than gas sold by state-owned utilities. This
move is set to create stiff competition.
Not to be left behind, GSPC plans to
implement gas-distribution and CNG projects in
40-odd cities and towns of Gujarat. The projects,
currently in various phases of development, will
supply gas to domestic, commercial and industrial
consumers.
However, as in the case of
garnering overseas oil resources, the specter of
China always looms large. India is desperately
looking for long-term gas-supply contracts with
gas-rich nations in Central Asia, Africa and the
Middle East. Some 12,000 megawatts of India's gas
power plants continue to run at only half their
capacity. After a recent decision by the
government of Myanmar to supply gas to China,
India is making swift maneuvers to ensure the $1
billion Myanmar-Bangladesh-India gas pipeline
becomes a reality.
India has signed a
further gas deal with Myanmar's government to
explore Block A-7 off the coast of Arakan state,
with GAIL a part of the consortium. The agreement
means GAIL is now active in
